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Bought By Many uses crowd clout to negotiate cheaper pug insurance

Financial services startup Bought By Many invites groups of people with specific insurance needs -- such as pug owners and diabetic travellers -- to club together and then negotiates better policies on their behalf

Wrinkly and spade-faced, pugs are some of the most comical canines on offer. But their absurd attributes make them prone to health issues. Those bulging eyes? They have a tendency to pop out after an enthusiastic neck squeeze. Those squished faces? A recipe for respiratory disaster.

Thieves, however, are seemingly unperturbed by the dogs' physiological failures. Pugs' high financial value, small stature and inquisitive nature mean that they are not only sickly but also highly nickable. These factors combine to make it quite tricky to insure a pug, with the breed being excluded from some policies or charged a high premium.

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It's not just pug owners who are penalised in this way: there are many niche markets that are not well-served by high street insurance giants. This is where Bought By Many comes in.

Bought by Many encourages groups of people with specific insurance needs to club together to buy insurance in order to get cheaper policies or policies that are better tailored to their needs.

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Launched in 2011 by financial services veteran Steven Mendel along with IT specialist Guy Farley and strategist and marketer Sam Gilbert, Bought By Many acts as an intermediary to negotiate with insurance companies better deals for large groups of customers with niche needs.

Mendel had the idea after leaving a corporate career and discovering that the cost of his family medical cover went up "four fold". He felt that it was incredibly unfair that large companies are able to negotiate such enormous discounts, while individuals don't have an easy way to do so. At the same time he saw a trend for group buying of this sort in other sectors: utilities, telecoms, groceries, but not financial services. And thus, Bought By Many was born.

It's not just pug owners that the company is working with -- it's also owners of French Bulldogs and pedigree cats. Beyond animals, there is a group set up for the bulk buying of travel insurance of people with diabetes. Diabetic people often have to pay a lot for travel insurance because of their pre-existing condition. So far there are already 371 people signed up to the group who are keen to leverage the collective buying clout.

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In some cases it's simply about living in a certain postcode.

Bought By Many has created a buying collective for home and contents insurance for people who live in Yeovil. The company has worked with Legal & General to get a discount of 12.5 percent if 100 people sign up. There is also a group for insuring children who play rugby with £1m personal accident cover.

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The company finds these niche groups by looking at Google search data to see which niches have high volumes of search queries. There is also a data entry box on its website letting people submit their own policy ideas. They then validate those segments through social media and engaging with niche blogs, Facebook groups and other stakeholders. Having established the market, the company works out the group's specific requirements and then approaches the insurance companies to negotiate a deal on a policy.

There are three ways that Bought By Many policies can come about: the company can create a brand new insurance policy with an underwriter at Lloyds of London; it can find an insurance company that already has an appropriate policy and negotiate purely on price and, finally, it can ask an insurance company to tailor an existing policy so it better meets the requirements of a particular group.

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Currently this is done on a case-by-case basis, but Mendel told Wired.co.uk that the plan is to build a platform that allows the company to post up the requirements of a new niche group and have the insurance companies bid for the business.

So far, insurance companies have been receptive to Bought By Many's approaches, however Mendel is keen to point out that a major challenge is the fact that the insurance industry moves at a "glacial pace". "It hasn't innovated in a long time because it hasn't needed to."

Another challenge has been to stay focused. "How do we make sure we focus on our core business. It's easy to get pulled off in lots of different directions. There are so many exciting opportunities but we need to stay stuck to our knitting," Mendel told Wired.co.uk. "We've also made sure we keep all tech development in-house."

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The company has one angel investor who they won't name but who "opens doors" in the insurance business. Once they've brought some more groups to market, the plan is to "go and do a proper fundraising round" that will allow the business to scale.